Management primer for high tech: An entrepreneur's view;

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An Entrepreneur's View
£.
Primer
for
Hiqn Teen
by STANLEY RJ$CH/Executive Vice-President and
Technical Director, Advanced Energy Dynamics, Natick, Mass.
nndrew Mellon once said:
"I'd rather have a
market than a mill." A
budding entrepreneur should
stamp that on the first page of
every business plan. For whether
his new firm lives or fails is going
to depend on identifying the
customers' needs, not on that
revolutionary product sequestered
in his laboratory.
Now that's the keystone, but
there is more, of course, to
starting a successful business.
More than 60 entrepreneurs have
appeared before the MIT Enter­prise
Forum, where experienced
businessmen offer advice in a
public forum to firms with prob­lems
or to new businessmen just
starting out.
One common denominator that
describes these new entrepreneurs
is a lack of focus. Some don't
know what product areas they
are in, or whether they're selling
a product or a service. Others
don't know where they're going,
whether they're going to sell out
down the road or try to become
a Fortune 500 company. What
makes the right management
team confuses some. Still others
are bewildered by the world
of finance.
The Rules of the Game
The Management Team. One of
the keys to good management is
not to run a one-man band. I
remember the questions to one
entrepreneur: Who's the CEO? "I
am." Who's the chief engineer? "I
am." Who's the sales manager?
"I am." And so on. And why are
you here? "Well, things aren't so
good." This CEO complained that
his product showed a good user
benefit, but he was grossing only
$50,000 a year—a disaster. Who's
the sales manager? "I am." How
much of your time do you spend
on sales? "Ten percent." It figured.
The entrepreneur can't be all
things to all people. To those who
think they cannot afford a sales
manager, the fact is that they
cannot afford not to have one.
Some entrepreneurs "will hire a
sales person who will put money
into the company. The money -will
pay for the person, and he'll
watch how it's spent. Or the
entrepreneur will offer stock
options as incentives and pay a
smaller amount.
The point is that venture
capitalists do not often invest in a
one-man show. They look for a
first-rate management team, and
they're further pleased when the
company has an active board of
directors. These are concepts the
streetwise businessman practices
automatically, but they are just
now being reflected in the
business plans we see at the
Enterprise Forum.
Business Planning. The entre­preneur
has to figure out what he
wants to be -when his firm grows
up. Will the company be a
personal cash cow? Will he sell